Southcoast Announces 2014 First Quarter Results

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| Source: Southcoast Financial Corporation

MT. PLEASANT, S.C., April 10, 2014 (GLOBE NEWSWIRE) -- Southcoast Financial Corporation (Nasdaq:SOCB) announced that it had unaudited pretax income of $988,000 and after tax net income of $643,000, or $.09 per basic share, for the quarter ended March 31, 2014. This compares to unaudited pretax income of $1,061,000 and after tax net income of $1,006,000, or $0.14 per basic share, for the quarter ended March 31, 2013. The March 31, 2014 income per share is based on 7,085,818 basic average shares compared to 7,070,375 basic average shares for 2013. The 2014 results include the continued improvement in asset quality, deposit mix and net interest margin.

For the quarter ended March 31, 2014, net interest income totaled $3,630,000, an increase of $197,000 from $3,433,000 for the quarter ended March 31, 2013. The net interest margin increased to 3.81% as of March 31, 2014 from 3.65% as of March 31, 2013.

Noninterest income for 2014 decreased to $488,000 from $589,000 for 2013, primarily due to an $83,000 reduction in mortgage loan and related fees.

Noninterest expense levels increased to $3,130,000 for 2014 from $2,961,000 for 2013. Included in 2013 was the benefit of $288,000 in net gains on sales of other real estate owned compared to only $105,000 in 2014.

Tax expense increased to $345,000 for 2014 from $55,000 for 2013. In the first quarter of 2013, the company was not accruing any Federal income tax due to its deferred tax asset (DTA) valuation allowance. The valuation allowance was reversed later in 2013, requiring tax expense to once again be accrued.

Total assets as of March 31, 2014 were $453.0 million compared to $447.4 million as of December 31, 2013, an increase of 1.26%. Loans, excluding loans held for sale, increased 2.23% to $339.3 million, from $331.9 million as of December 31, 2013. Deposits increased by $15.6 million to $331.5 million at March 31, 2014, from $315.8 million at December 31, 2013. This increase was comprised of an $11.9 million increase in noninterest demand deposits and a $5.5 million increase in time deposits, offset by a $1.8 million decrease in interest bearing nontime deposits. Growth in core deposits is a major strategy incorporated into our 2014 strategic plan.

The Company's ratio of nonperforming assets to total assets was 2.92% as of March 31, 2014, compared to 3.90% as of March 31, 2013. The allowance for loan losses as a percentage of loans was 1.81% as of March 31, 2014, compared to 2.41% as of March 31, 2013. The allowance for loan losses as a percentage of total nonperforming loans totaled 68.61% as of March 31, 2014, compared to 74.88% as of March 31, 2013. The year to year reduction in the allowance for loan losses to total loans was reflective of improved credit quality in the loan portfolio, most notably due to a significant reduction in criticized and classified loans. The subsidiary bank's capital position as of March 31, 2014 remains in excess of regulatory well-capitalized requirements.

"We are proud of the improvements in our Company's performance as they reflect the loyalty of our customers and the dedication of our employees," said L. Wayne Pearson, Chairman and Chief Executive Officer.

About Southcoast Financial Corporation

Southcoast Financial Corporation, headquartered in Mt. Pleasant, South Carolina, is the holding company of Southcoast Community Bank. The Bank, which opened for business July 20, 1998, is a state chartered commercial bank operating from its main office at 530 Johnnie Dodds Boulevard in Mt. Pleasant, South Carolina and nine branches in the Charleston, South Carolina area. Southcoast Financial Corporation's common stock is traded on the NASDAQ Global Market under the symbol SOCB.

Southcoast Financial Corporation
Consolidated Balance Sheets
(Dollars in thousands)
 
  March 31 December 31
  2014 2013
  (Unaudited)  
Assets    
Cash and cash equivalents $ 29,280 $ 28,460
Investments 42,908 43,451
Loans held for sale 0 271
Loans 339,291 331,906
Less: Allowance for loan losses 6,146 6,041
     
Net loans 333,145 325,865
Fixed assets 20,950 21,150
Other assets 26,743 28,187
     
Total Assets $ 453,026 $ 447,384
     
Liabilities & Shareholders' Equity    
Deposits:    
Noninterest bearing $ 52,337 $ 40,399
Interest bearing nontime 137,100 138,899
Time deposits 142,024 136,530
     
Total deposits 331,461 315,828
Other borrowings 63,694 73,818
Other liabilities 4,003 4,859
Junior subordinated debentures 10,310 10,310
     
Total liabilities 409,468 404,815
     
Shareholders' Equity    
Common Stock 54,565 54,544
Accumulated deficit  (9,294)  (9,937)
Accumulated other comprehensive loss  (1,713)  (2,038)
     
Total shareholders' equity 43,558 42,569
     
Total Liabilities and Shareholders' equity $ 453,026 $ 447,384
     
Book Value Per Share $ 6.15 $ 6.01
 
Southcoast Financial Corporation
Consolidated Income Statement
(Dollars in thousands, except share data)
 
 
  Quarter Ended
  March 31, March 31,
  2014 2013
  (Unaudited) (Unaudited)
Interest Income    
Interest and fees on loans $ 4,235 $ 4,201
Interest on investments 301 252
Interest on Fed funds sold 6 6
     
Total interest income 4,542 4,459
     
Interest expense 912 1,026
     
Net interest income 3,630 3,433
Provision for loan losses  --  --
     
Net interest after provision 3,630 3,433
     
Noninterest income 488 589
     
Total noninterest income 488 589
     
Total operating income 4,118 4,022
     
Noninterest expense    
Salaries and benefits 1,759 1,679
Occupancy and furniture and equipment 719 753
Other expenses 652 529
     
Total noninterest expense 3,130 2,961
     
Income before taxes 988 1,061
Income tax expense 345 55
     
Net income $ 643 $ 1,006
     
Basic net income per common share $ 0.09 $ 0.14
     
Diluted net income per common share $ 0.09 $ 0.14
     
Average number of common shares    
Basic 7,085,818 7,070,375
Diluted 7,085,818 7,070,375
 
Southcoast Financial Corporation
SELECTED FINANCIAL DATA
(dollars in thousands, except earnings per share)
 
  Three Months Ended
  March 31, 2014 March 31, 2013
  (Unaudited)
INCOME STATEMENT DATA    
Net interest income  $ 3,630  $ 3,433
Provision for loan losses  --   -- 
Noninterest income 488 589
Noninterest expenses 3,130 2,961
Income Tax expense 345 55
Net income  $ 643  $ 1,006
     
PER SHARE DATA    
Net income per share    
Basic  $ 0.09  $ 0.14
Diluted  $ 0.09  $ 0.14
     
     
Average shares outstanding1    
Basic 7,085,818 7,070,375
Diluted 7,085,818 7,070,375
     
Key ratios    
Return on assets2 0.59% 0.95%
Return on equity2 6.06% 11.74%
Nonperforming assets to assets3 2.92% 3.90%
Reserve to loans4 1.81% 2.41%
Reserve to nonperforming loans 68.61% 74.88%
Net interest margin2 3.81% 3.65%

1 Prior period per share amounts adjusted for 15% stock dividend paid during June 2013.

2 Ratios for three months are annualized.

3 Includes nonaccruing loans, loans 90 or more days past due still accruing interest, troubled debt restructures, and other real estate owned.

4 Includes nonaccruing loans, loans 90 or more days past due still accruing interest, and troubled debt restructures.

William C. Heslop
Senior Vice President and Chief Financial Officer
(843) 216-3019